Global Energy Storage Market Thrives Despite US and China Policy Shifts

Global Energy Storage Market Remains Resilient Amid Policy Changes

Utility-scale projects and new markets are driving record growth in 2025

June 24, 2025 / Staff / Energy Storage, Market & Policy

According to BloombergNEF’s (BNEF) latest outlook, global energy storage capacity is projected to increase by 35% in 2025, reaching 94 GW or 247 GWh. BNEF anticipates a compound annual growth rate of 14.7% between 2025 and 2035, with annual additions expected to reach 220 GW or 972 GWh by 2035. This growth will be fueled by traditional markets and large-scale utility projects that are either underway or being planned in countries including Saudi Arabia, South Africa, Australia, the Netherlands, Chile, Canada, and the UK.

### Market Developments

#### China’s Evolving Policies

Mainland China continues to dominate global energy storage demand, largely driven by regulatory requirements that necessitate storage alongside utility-scale solar and wind projects. However, a new policy introduced in February 2025 mandates that 100% of solar and wind generation must be traded on the wholesale power market, effectively removing storage as a prerequisite for integrating renewable energy sources into the grid. Local governments have until the end of 2025 to clarify the specifics of this implementation. Despite this policy shift, several provinces in China still require battery pairing for new renewable projects. BNEF remains optimistic that storage deployment in China will remain strong, with the growth increasingly relying on economic viability rather than mandates, contingent on local policy outcomes.

#### U.S. Market Challenges

In the U.S., the energy storage outlook has weakened due to a significant increase in tariffs on imports from China, Canada, and Mexico. Following President Donald Trump’s return to the White House in 2025, import tariffs were raised in April, with base tariffs on Chinese goods climbing to 145%. BNEF’s base-case scenario estimates an overall 54% import tariff, which has led to a 30% increase in the costs of turnkey four-hour battery systems, bringing the price to $266/kWh. Under the higher tariff scenario of 145%, annual installations are expected to decline by 51% to 74% from 2025 to 2027 compared to the base case. Rising costs have already resulted in project delays, cancellations, and renegotiated supply contracts, impacting the U.S. domestic battery industry, which still relies heavily on imports of battery materials like graphite from China.

### Global Trends

Worldwide, the energy storage market is increasingly led by the utility-scale segment, particularly in countries such as China, Saudi Arabia, South Africa, Australia, and Chile. Government mandates and auctions are driving gigawatt-level advancements in these regions. Utility-scale installations are accelerating in Europe, the Middle East, and Africa, with expectations to surpass the residential segment by 2026 due to increased utility procurement and policy support. The residential market has shown mixed results, slowing in Europe while experiencing growth in California following policy adjustments in 2024. BNEF forecasts that commercial deployments will exceed residential storage by 2030 as solar battery attachment rates increase.

### Technology Landscape

Lithium iron phosphate (LFP) remains the leading chemistry in the stationary energy storage market. BNEF notes that Chinese battery manufacturers specializing in LFP production are benefiting from domestic market growth and are aggressively expanding internationally. Major producers, including Contemporary Amperex Technology, BYD, EVE Energy, CALB, and Hithium, are developing products specifically for the energy storage market. This trend signifies a divergence from the electric vehicle (EV) chemistry mix, which largely features nickel-based lithium-ion chemistries like nickel-manganese-cobalt oxide (NMC) and nickel-cobalt-aluminum oxide (NCA). While NMC and NCA offer higher energy density beneficial for EVs, LFP’s cost-effectiveness and safety make it more suitable for stationary storage.

In Japan and South Korea, where manufacturers have historically focused on nickel-based chemistries, a portion of production is expected to meet domestic energy storage demand, while also addressing a declining overseas demand for NMC through 2035. The U.S. market may continue to see NMC used in utility-scale projects until at least 2027. Despite the clear shift towards LFP, significant shipments of NMC batteries for energy storage were recorded in 2024. The high tariffs on Chinese imports, where most LFP batteries are produced, are anticipated to decrease overall U.S. energy storage demand; however, these tariffs could make NMC batteries from non-Chinese sources more competitive.

Expectations for sodium-ion batteries have lessened as LFP prices continue to drop, leading to reduced forecasts for sodium-ion technology adoption. Corporate funding for energy storage companies, encompassing venture capital, debt, and public market financing, totaled $2.2 billion across 31 deals in Q1 2025, according to Mercom Capital Group’s recently published Q1 2025 Funding and M&A Report for Energy Storage.